Daily fantasy sports companies see room for growth in New York

State tax revenue projections for 2017 are more than $3 million

By Matthew Hamilton

Updated
1:27 pm EST, Wednesday, January 10, 2018

FILE - In this Oct. 25, 2015, photo, workers set up a DraftKings promotions tent in the parking lot of Gillette Stadium, in Foxborough, Mass., before an NFL football game between the New England Patriots and New York Jets. New York's attorney general on Tuesday, Nov. 10, 2015, ordered the daily fantasy sports companies DraftKings and FanDuel to stop accepting bets in the state, saying their operations amount to illegal gambling. (AP Photo/Charles Krupa, File) ORG XMIT: NY131 less

FILE - In this Oct. 25, 2015, photo, workers set up a DraftKings promotions tent in the parking lot of Gillette Stadium, in Foxborough, Mass., before an NFL football game between the New England Patriots and ... more

Photo: Charles Krupa

Photo: Charles Krupa

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FILE - In this Oct. 25, 2015, photo, workers set up a DraftKings promotions tent in the parking lot of Gillette Stadium, in Foxborough, Mass., before an NFL football game between the New England Patriots and New York Jets. New York's attorney general on Tuesday, Nov. 10, 2015, ordered the daily fantasy sports companies DraftKings and FanDuel to stop accepting bets in the state, saying their operations amount to illegal gambling. (AP Photo/Charles Krupa, File) ORG XMIT: NY131 less

FILE - In this Oct. 25, 2015, photo, workers set up a DraftKings promotions tent in the parking lot of Gillette Stadium, in Foxborough, Mass., before an NFL football game between the New England Patriots and ... more

Photo: Charles Krupa

Daily fantasy sports companies see room for growth in New York

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ALBANY — It's not quite a jackpot, but supporters of daily fantasy sports in New York still see about $3 million in tax revenues generated by contests in 2017 as a sweet prize.

"I had expected a little bit more, but $3 million is better than no million," Assemblyman Gary Pretlow, D-Westchester County, said Wednesday after an Albany hearing on the daily fantasy sports industry.

Industry representatives said about $3 million in tax revenue was generated between January and November, and numbers for December — a big month for football games — are not yet final.

The state collects a 15 percent tax on in-state gross revenues and an additional smaller tax that does not exceed $50,000 annually per operator. Tax revenues are used to help fund public education.

Representatives from companies that are licensed to host paid games in New York, including the nation's two largest operators, still are awaiting final industry regulations from the state Gaming Commission more than a year after their games were legalized by state lawmakers in 2016.

But even without knowing what exact regulatory structure they'll have to operate within moving forward, the companies are positive about the industry's trajectory in one of their largest U.S. markets.

Operators expect that the tax revenues for the state will grow, Peter Schoenke, chairman of the Fantasy Sports Trade Association, told members of the Assembly's Racing, Wagering and Gaming Committee.

Though the companies say information on how many New York players use their platforms is proprietary, FanDuel's Ari Borod said hundreds of thousands of Empire State residents are playing daily fantasy games through the 15 companies that have been granted temporary licenses to operate.

"I know New York state is one of our biggest markets in the country," DraftKings' Griffin Finan said.

The companies are looking at new types of games as an area for growth, but they face a roadblock: Under the law, the companies granted temporary licenses may offer only those games that they offered prior to November 2015: For now, while football and baseball games are popular, companies are not able to offer games for golf or soccer, for example.

Though those sports are not the cash cow that, say, the National Football League is for the fantasy sports industry, Borod said those sports account for a "nontrivial" percentage of business elsewhere.

Final regulations from the Gaming Commission could unlock the ability to offer new games.

A spokesman for the commission did not immediately respond to a request for comment about when the final regulations will be released and for more exact data on taxes collected so far in the 2017-18 fiscal year, which ends March 31.

Daily fantasy sports is considered a game of skill, not chance. That means paid contests are not considered gambling under state law.